For the millions of Americans carrying credit card debt, making progress on their balances feels increasingly difficult in today's landscape.
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making → carry → landscape
Part of the issue is that the interest rate on the average credit card is above 22% currently, meaning that if you're carrying a balance from month to month, a significant portion of each monthly credit card payment goes toward interest rather than reducing what's owed.
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what → mean → interest
But with everyday expenses continuing to strain household budgets, finding extra money to put toward those balances isn't always realistic.
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finding → continue → balances
A recent Freedom Debt Relief study shows that of the borrowers with substantial debt, 28% can only afford to make the minimum-required payments, while 20% are behind on at least one account.
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% → show → account
In turn, it's particularly important for borrowers to find ways to reduce borrowing costs right now.
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borrowers → find → costs
While transferring a balance to a lower-rate card or consolidating debt with a personal loan may help, those approaches aren't necessarily accessible to everyone.
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approaches → transfer → everyone
Fortunately, changing how you approach your existing credit card payments is another option to consider.
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you → change → payments
One strategy that could be worth examining is making two payments each month instead of one.
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that → examine → payments
But can making two card payments every month really save you money on interest charges?
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making → make → charges
That's what we'll examine below.
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we → examine → what
Can making two credit card payments a month save you money?
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making → make → money
Making two credit card payments per month can potentially save you money on interest.
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Making → make → interest
Still, the amount depends on your balance, interest rate, payment timing and whether you're paying more than the required minimum.
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you → depend → minimum
You may reduce your interest charges
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You → reduce → charges
Most credit card issuers calculate the interest charges you owe each month using your average daily balance.
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you → calculate → balance
That means the amount you owe throughout your billing cycle, rather than just on your payment due date, helps determine how much interest accrues.
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interest → mean → date
Making an additional payment earlier in the billing cycle can lower your balance sooner, potentially reducing the interest charged.
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Making → make → interest
For example, if you typically make a $400 payment at the end of the month, paying $200 halfway through the month and another $200 on your regular payment date could reduce your average daily balance.
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paying → make → balance
The savings from changing the timing alone may be modest, however.
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savings → change → timing
And if you're already paying your statement balance in full each month and maintaining your purchase grace period, splitting payments generally won't provide additional savings.
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splitting → pay → savings
You could pay off your debt faster
Making two payments can also accelerate debt repayment, particularly if the strategy encourages you to contribute more than you otherwise would.
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you → pay → more
For example, someone who typically pays $250 monthly might instead make two $150 payments.
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who → pay → payments
That increases their total monthly contribution to $300, putting an additional $600 toward their debt over a year.
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That → increase → year
Those extra payments can reduce the principal credit card balance faster, which also lowers future interest charges.
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which → reduce → charges
Over time, that combination could shorten the repayment period and reduce the total cost of carrying the debt.
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combination → shorten → debt
Your credit score could benefit
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score → benefit → ?
Another potential advantage of making two credit card payments each month involves your credit utilization ratio, which measures how much of your available revolving credit you're using.
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Lower utilization can help your credit score.
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utilization → help → score
Credit card issuers typically report account balances to credit bureaus around the statement closing date, though reporting schedules vary.
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schedules → report → date
Making an additional payment before that date could reduce the balance reported, potentially improving your utilization ratio.
That benefit isn't guaranteed, however, and, as noted, it doesn't necessarily translate into immediate interest savings, either.
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it → make → savings
Payment history and other factors also influence credit scores, so it's important to keep that in mind if you're relying on this approach to improve your credit.
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you → influence → credit
How to make two monthly credit card payments work for you
While splitting your credit card payments into two each month can be useful, getting the most from the strategy requires more than simply sending money to your issuer twice a month.
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getting → make → issuer
Consider making one payment shortly after receiving your paycheck and another before your credit card statement closes.
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statement → consider → paycheck
Paying earlier can help reduce your average daily balance, while paying before the closing date may lower your reported utilization.
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paying → pay → utilization
You may also want to pay more on what's owed whenever possible.
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what → want → more
Splitting your usual payment into two installments may produce limited savings, but increasing the total amount you pay each month can have a much greater impact on your balance and interest costs.
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you → split → balance
Making an early payment doesn't necessarily eliminate your obligation to satisfy the minimum payment by the due date.
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Making → make → date
So, check your account to ensure you've met the card issuer's requirements and avoid late fees.
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you → check → fees
In some cases, it may also make sense to consider other debt repayment options instead.
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it → make → options
If your balances remain difficult to manage despite making frequent payments, a balance transfer card, debt consolidation loan or even working with a credit counselor or debt relief expert may provide more meaningful relief.
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card → remain → relief
…and 4 more, not listed.
The Aporia
